As Pakistan, Afghanistan and the U.S. prepare for negotiating with the Taliban it may be useful to examine the dynamics of this war to get an understanding of the peace process. Even as this process proceeds violence is likely to persist. Therefore the more general question of the relationship between violence and development remains. 

A few years ago when I was teaching Institutional Economics to graduate students at Beaconhouse National University we analyzed the dynamics of the ongoing war with the Taliban using the North et.al model (2009). We postulated that when a specialist of violence who controls the system of power and rent appropriation is engaged in combat with a new specialist of violence seeking takeover, a point can be reached where negotiations begin. This is a situation in which each combatant believes the other has recognized that peace, whereby there is rent sharing between the two protagonists, gives greater economic gains than continued conflict. On the basis of this analysis we predicted that the U.S and its ostensible allies Pakistan and Afghanistan would enter into peace negotiations with the Taliban sooner or later.

A clear cut victory was unlikely because of the constraints operating on the U.S., Afghanistan and Pakistan on the one hand and the nature of this war on the other. The U.S. would not be able to bear for long the heavy cost in soldiers’ lives and hundreds of billions of dollars. The Afghan government inspite of NATO help would not be able to field an army of sufficient size, skill and motivation to win the war on its own. In Pakistan, the Taliban following the classic principles of guerilla warfare were giving up space to win time. They used this time for political mobilization in Pakistan, so that they were able to capture significant sections of the ideological space in public discourse, the media, political parties and the very security apparatus through which the Taliban violence was to be managed. The Taliban position was further strengthened by the fact that elements within the security apparatus who had earlier nurtured certain Taliban groups as strategic assets continued to allegedly maintain links and even sympathies with them. Consequently it became increasingly difficult to build a political consensus to make war on the Taliban. This lack of the will to fight the Taliban persisted even though they were launching deadly attacks on Pakistan’s military installations, places of worship and assassinating key political leaders. The problem of a determined prosecution of war against the Taliban was further compounded by the fact that the military faced significant resource constraints in terms of manpower, weaponry  and finance given that they felt it necessary to maintain deployment on the eastern front while conducting low intensity operations on the western front. The financial constraint became acute as the U.S. suspecting a “double game” became tight fisted and Pakistan’s government with the economy in recession faced a financial crisis. Thus the predicted outcome occurred: negotiations.

The New Growth Framework formulated under the able leadership of Dr. Nadeem Ul Haque specifies an admirable agenda of institutional change aimed at creating the competitive environment and the necessary incentives for productivity increase to place Pakistan on a private sector led path of sustained growth. However it is based on the neo-classical assumption that growth will occur when profitable opportunities present themselves unless there are governmental impediments that distort markets. This assumption is fundamentally flawed not only because of the fact that it ignores the question of equity but also the problem of violence that recent research shows is the central problem of development. In Pakistan there is widespread violence that restricts the writ of the state, undermines contracts and constrains transactions, all of which are essential for growth. Therefore the control of violence is a necessary condition for sustained growth to occur. This has become particularly important now with the prospect of an unprecedented windfall gain for the economy in the form of the USD 45 billion foreign investment contract signed last week between a UAE investment group and a Pakistani real estate tycoon.